Sunday, September 30, 2007

2007: the subversion begins

Strange signs and wonders are visible in the sky. Catalans Dragons beat Wigan. And Felix Salmon becomes an autogestionniste, in the auto industry to boot.
Now the VEBA, according to the WSJ, is a union-run trust – which means that the UAW now controls more than enough money to buy GM.

Of course, the VEBA is designed to pay healthcare costs, not to run a car company. So what it should probably be doing is trying to place its investments with money managers mandated to beat some kind of healthcare-cost benchmark. And the obvious way to do that would be to invest in hospitals, pharmaceutical companies, health insurers and the like – rather than in the declining US auto sector.

On the other hand, there are obvious advantages to the union owning the company – it would be very unlikely to go on strike, for starters. And there wouldn't be a conflict between shareholders wanting to maximize dividends and workers wanting to maximize earnings.
It's like Chris Dillow took over his brain! (There might be an interesting product coming up, too.)

Walter Reuther, the legendary UAW president, famously had the solution back in the 40s when the healthcare benefits were originally agreed - he thought the automakers should back a universal healthcare scheme in return for the union letting them off the hook, which anyone who isn't completely bug-fuck crazy now sees would have been very wise indeed. But they were willing to sign a blank cheque on their own money rather than admit the principle.

Update: Well, well, well...

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